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The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC]

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now – don’t wait until they hit 5% to start searching for your dream home!
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Housing Market: Another Gigantic Difference Between 2008 and 2018

Housing Market: Another Gigantic Difference Between 2008 and 2018 | Simplifying The Market

Some are attempting to compare the current housing market to the market leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.

However, there is a major difference between the two markets. Last decade, while demand was being artificially created by extremely loose lending standards, a tremendous amount of inventory was coming to the market to satisfy that demand. Below is a graph of the inventory of homes available for sale leading up to the 2008 crash.

Housing Market: Another Gigantic Difference Between 2008 and 2018 | Simplifying The Market

A normal market should have approximately 6 months supply of housing inventory. As we can see, that number jumped to over 11 months supply leading up to the housing crisis. When questionable mortgage practices ceased, and demand dried up, there was a glut of inventory on the market which caused prices to drop as there was too much supply and not enough demand.

Today is radically different!

There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).

However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.

Housing Market: Another Gigantic Difference Between 2008 and 2018 | Simplifying The Market

Bottom Line

We will not have a glut of inventory like we did back in 2008 and home values won’t come tumbling down. Instead, if demand weakens, we will return to a normal market (approximately a 6-month supply) with historic levels of appreciation (3.6% annually).

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Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts

Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts | Simplifying The Market

It should come as no surprise that buying a home in a good school district is important to homebuyers. According to a report from Realtor.com, 86% of 18-34 year-olds and 84% of those aged 35-54 indicated that their home search areas were defined by school district boundaries.

What is surprising, however, is that 78% of recent homebuyers sacrificed features from their “must-have” lists in order to find homes within their dream school districts.

The top feature sacrificed was a garage at 19%, followed closely by a large backyard, an updated kitchen, the desired number of bedrooms, and an outdoor living area. The full results are shown in the graph below.

Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts | Simplifying The Market

Buyers are attracted to schools with high test scores, accelerated academic programs, art and music programs, diversity, and before and after-school programs.

With a limited number of homes available to buy in today’s real estate market, competition is fierce for homes in good school districts. Danielle Hale, Chief Economist for Realtor.com, explained further,

“Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise.

For many buyers and not just buyers with children, ‘location, location, location,’ means ‘schools, schools, schools.’” (emphasis added)

Bottom Line

For buyers across the country, the quality of their children’s (or future children’s) education ranks highest on their must-have lists. Before you start the search for your next home, let’s get together to discuss the market conditions in our area.

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VA Loans: Making a Home for the Brave Possible

VA Loans: Making a Home for the Brave Possible | Simplifying The Market

Since the creation of the Veterans Affairs (VA) Home Loans Program, over 22 million veterans have achieved the American Dream of homeownership. Many veterans do not know the details of the program and therefore do not take advantage of the benefits available to them.

If you are a veteran or you know someone who is, here is a breakdown of the VA Home Loan benefits that can be used to achieve the American Dream!

Top 5 Benefits of a VA Home Loan

  1. The greatest benefit of a VA Loan is that borrowers can buy a home with a 0% down payment. In 2016, 82% of all VA Loans put down 0%!
  2. Primary Mortgage Insurance (PMI) is not required! (Most other loans with down payments under 20% require PMI, which adds additional costs to your monthly housing expense!)
  3. Credit Score requirements are also lower for VA Home Loans. The average FICO® score of a borrower for an approved VA Loan is 620, compared to 676 (FHA) or 753 (Conventional).
  4. There is also a limitation on a veteran buyer’s closing costs. Sellers can pay all of a buyer’s loan-related closing costs and up to 4% in concessions in some cases.
  5. Even with interest rates rising, VA Loans continue to have the lowest average interest rates of all loan types.

Who Qualifies for a VA Home Loan?

One of the most important first steps when applying for a VA Home Loan is obtaining your Certificate of Eligibility (COE). “The COE verifies to the lender that you are eligible for a VA-backed loan.”

You Can Apply for a VA Loan if You:

  • Serve 90 consecutive days during wartime
  • Serve 181 consecutive days during peacetime
  • Have more than 6 years in the National Guard or Reserves
  • Are the spouse of a service member who has died in the line of duty or as the result of a service-related disability

You Can Use a VA Loan To:

  • Purchase a Home
  • Purchase a Condo
  • Build a Home
  • Refinance an existing home loan
  • Make improvements to a home by installing energy-related features or making energy-efficient improvements

Bottom Line

For more information or to find out if you or a loved one would qualify to use the VA Home Loan Benefit, let’s get together! Thank you for your service!

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Buying This Summer? Be Prepared for Bidding Wars

Buying This Summer? Be Prepared for Bidding Wars | Simplifying The Market

Summer is traditionally a busy season for real estate. Buyers come out in force and homeowners list their houses for sale hoping to capitalize on those buyers who are looking to purchase before the new school year. This year will be no different!

Buyers have already been out in force looking for their dream homes and more are on their way. The challenge is that the inventory of homes for sale has not kept up with demand, which has led to A LOT of competition for the homes that are available.

A recent article by the National Association of Realtors touched on the current market conditions:

“Realtors® in areas with strong job markets report that consumer frustration is rising. Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.”

Realtor.com went on to explain why buyers are flocking to the market in such big numbers:

“A booming economy and stable employment in most parts of the country have created a new generation of eager home buyers – and led to fevered price battles spilling over into some unexpected, smaller markets.”

Javier Vivas, Director of Economic Research for Realtor.com had this to say about competition:

Multiple-offer scenarios are no longer reserved to the usual big, fast-moving markets…demand for homes has spilled outward into secondary, smaller markets, and more buyers are gearing up to face fierce competition in more places around the country.”

Realtor.com looked at the number of homes that were selling above asking price to determine which markets were heating up. Below are the Top 10:

  • Akron, OH
  • Worcester, MA
  • Lexington, KY
  • Irvine, CA
  • Greensboro, NC
  • Sioux Falls, SD
  • Madison, WI
  • Louisville, KY
  • Tacoma, WA
  • Little Rock, AR

Bottom Line

Let’s get together to discuss our exact market conditions so that we can help you create a strategy to secure your new home in this competitive atmosphere!

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5 Reasons Millennials Choose to Buy a Home [INFOGRAPHIC]

5 Reasons Millennials Choose to Buy a Home [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
  • The top reason millennials choose to buy is to have control over their living space, at 93%.
  • Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like or renovate an outdated part of their living space.
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Are You Wondering If You Can Buy Your First Home?

Are You Wondering If You Can Buy Your First Home? | Simplifying The Market

There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they get married or start a family, some might think they are too young, and still, some others might think their current incomes would never enable them to qualify for a mortgage.

We want to share what the typical first-time homebuyer actually looks like based on the National Association of Realtors’ most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first-time buyer:

Are You Wondering If You Can Buy Your First Home? | Simplifying The Market

Bottom Line

You may not be much different than many people who have already purchased their first homes. Let’s meet to determine if your dream home is within your grasp today.

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Top 4 Home Renovation For Maximum Return On Investment (ROI)

Renovation for Max Return On Investment

Renovation For Maximum Return On Investment

Renovation For Maximum Return On Investment

Top 4 Home Renovations for Max ROI [INFOGRAPHIC] | Simplifying The Market

Renovation For Maximum Return On Investment  Highlights:

  • Whether you are selling your home, just purchased your first home or are a homeowner planning to stay put for a while, there is value in knowing which renovation projects will net you the most Return On Investment (ROI).
  • A minor bathroom renovation can go a long way towards improving the quality of your everyday life and impressing homebuyers.
  • Adding curb appeal by upgrading your landscaping helps get buyers in the door.  These upgrades rank as the 2nd and 4th renovation for returns on investment.

 

If you are searching for a Bergen County Realtor contact Steven Batista at 201-207-5217. I help with all your real estate needs.

 

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Are Lending Standards Too Loose…or Too Tight?

Lending Standards 

Lending standards

Are lending standards too loose or too tight? With home values appreciating at record rates, some are concerned that we may be heading for another housing bubble.  Similar to the one we experienced a decade ago. 

One of the major culprits of that housing boom and bust was the loosening of standards for mortgage credit.

In a study done at the University of North Carolina immediately after the crisis, it was revealed that:

“Lenders began originating large numbers of high risk mortgages from around 2004 to 2007, and loans from those vintage years exhibited higher default rates than loans made either before or after.”

A study by John V Duca, John Muellbauer, and Anthony Murphy concluded that those risky mortgages caused the housing crisis:

“Our findings indicate that swings in credit standards played a major, if not the major, role in driving the recent boom and bust in US house prices.”

How do today’s mortgage lending standards compare to those from 2004 to 2007?

The Mortgage Bankers’ Association tracts mortgage lending standards in their Mortgage Credit Availability Index (MCAI).

A decline in the MCAI indicates that standards are tightening, while increases in the index are indicative of loosening credit.

The chart below hightlights the period between 2004 and 2007 when loose lending standards caused the housing bubble.

We can see that the index has risen slightly over the last several years.  We are nowhere near the standards that precipitated the housing crisis.

Lending Standards

Bottom Line

If anything, lending standards today are too tight and are preventing some qualified buyers from getting the mortgage credit they deserve.

If you're looking to get pre-qualified and learn about the lending standards, visit my partners page.  Contact one of my preferred mortgage specialists.

For all your real estate needs, contact Steven Batista at 201-207-5217 and start the home buying process.

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Homeownership: “A Man Is Not a Complete Man, Unless He Owns a House”

Homeownership: "A Man Is Not a Complete Man, Unless He Owns a House" | Simplifying The Market

The famous quote by Walt Whitman, “A man is not a whole and complete man, unless he owns a house and the ground it stands on,” can be used to describe homeownership in America today. The Census revealed that the percentage of homeowners in America has been steadily climbing back up since hitting a 50-year low in 2016. The homeownership rate in the first quarter of 2018 was 64.2%, higher than last year’s 63.6%.

Homeownership: "A Man Is Not a Complete Man, Unless He Owns a House" | Simplifying The Market

Chief Economist, Dr. Ralph McLaughlin, in his VUE Blog gave these new homeownership numbers some context:

“The trend is clear: the homeownership rate has been ticking up for five consecutive quarters, and the number of new renter households has fallen for four consecutive quarters. Owner-occupied households grew by 1.345 million from a year ago, while the number of renters actually fell by 286,000 households.

The fact that we now have four consecutive quarters where owner households increased while renter households fell is a strong sign households are making a switch from renting to buying. This is a trend that multifamily builders, investors, and landlords should take note of.”

In a separate article comparing the rental population in America to the homeowner population, Realtor.com also concluded that the gap is now shrinking:

“The U.S. added 1.3 million owner households over the last year and lost 286,000 renter households, the fourth consecutive quarter in which the number of renter households declined from the same quarter a year earlier. That could pose challenges for apartment landlords, who are bracing this year for one of the largest infusions of new rental supply in three decades.”

America’s belief in homeownership was also evidenced in a survey conducted by Pew Research. They asked consumers “How important is homeownership to achieving the American Dream?”

The results:

  • 43% said homeownership was essential to the American Dream
  • 48% said homeownership was important to the American Dream
  • Only 9% said it was not important

Bottom Line

Homeownership has been, is, and always will be a crucial part of the American Dream.